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Bain & Company issues strategic advice on blockchain in financial markets

Global management consulting firm Bain & Company recently issued a strategic advice report entitled Blockchain in Financial Markets: How to Gain an Edge, which recommends a systematic approach to dealing with the uncertainty surrounding distributed ledger tech.

This month, Boston-based business and management consulting firm Bain & Company published its report, Blockchain in Financial Markets: How to Gain an Edge, authored by Thomas Olsen, Frank Ford, John Ott, and Jennifer Zeng, Bain & Company partners from the Singapore, London, Shanghai, and Sydney financial services practices, respectively. The study, which was carried out in collaboration with American financial industry servicing firm Broadridge, provides key insights and outlines a strategic approach to gaining strategic advantage with blockchain in financial markets.

Although blockchain and distributed ledger technology (DLT) has been a hot topic in the industry in recent years, many participants in financial markets doubt whether they will be able to benefit from DLT in the short to medium-term. Distributed ledger tech has caught on in certain areas on banking, such as cross-border remittances, but for more broad, diverse financial markets, the path to implementation is somewhat murky. Around 80% of the financial institution executives surveyed expect DLT to be transformative, and to have a significant impact on financial markets. Similarly, around the same amount anticipated that their organisations will be using DLT before 2020.

Despite this reported optimism, determining its impact, and predicting when, where, and how DLT will finally reach scale presents challenges. The future of the regulatory environment remains unclear, and could potentially evolve with much variation between jurisdictions. Preparing for the blockchain demands considerable investments, and can bring about expensive headaches related to legacy IT systems and processes.

Some financial executives surveyed by Bain & Company have fully embraced blockchain, while others have opted for the ‘wait-and-see’ approach. Whatever the company’s choice, executives seem to agree that the situation has left many firms struggling with business cases and a general uncertainty about where to apply their DLT efforts. This competitive landscape creates an opportunity for firms to be proactive and gain strategic advantage.

Critical steps toward gaining strategic advantage recommended by Bain & Company were, among other things: rethinking market ecosystems, mutualising migration costs, preparing a fit-for-purpose DLT approach and roadmap, and finally, outlining a data-driven strategic approach to maintain going forward.

To read or download the full report, click here.

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